Non-Manufacturing Sector Numbers Up

Jan. 6, 2005--Business is still cruising along for America's non-manufacturing sector, according to the latest monthly survey released by the Institute for Supply Management (ISM).

According to the report released yesterday, business activity is at 63.1% -- up almost two percentage points from November, marking the 21st-straight month of increased business activity. Readings above 50% indicate the economy is growing.

"This has been a strong year all around," Phil Kauffman, the chairman of the ISM, non-manufacture survey committee and a professor of supply chain management at University of Houston-Downtown, said. "We've been above 60 from most of the year--this is all very positive."

There was some bad news though. The report sighted that the prices companyies pay to do business have increased, mostly due to the spike in oil prices, making December the 33rd-straight month of increases, leading some to feel "guarded" about 2005, according to Kauffman. However, with employment (fifth-straight month), order backlogs (20th-straight month) and exports (17th-straight month) all riding prolonged increases, most are optimistic about the future.

"The economy is expanding, positions are being filled-- this is all great news," Kauffman added.

ISM has been releasing studies on the manufacturing sector since the 1930s, but has only released studies on the non-manufacturing sector, which comprises 80% of the nation's GDP, since July 1997.

The study, which surveyed more than 370 purchasing and supply executives in 62 industries, is also one of the many indexes watched by Wall Street, as it provides a detailed backdrop to investors of conditions in various markets.